Correlation Between General Money and Arrow Managed
Can any of the company-specific risk be diversified away by investing in both General Money and Arrow Managed at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining General Money and Arrow Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Money Market and Arrow Managed Futures, you can compare the effects of market volatilities on General Money and Arrow Managed and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in General Money with a short position of Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Arrow Managed.
Diversification Opportunities for General Money and Arrow Managed
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between General and Arrow is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures and General Money is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on General Money Market are associated (or correlated) with Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of General Money i.e., General Money and Arrow Managed go up and down completely randomly.
Pair Corralation between General Money and Arrow Managed
Assuming the 90 days horizon General Money Market is expected to generate 0.24 times more return on investment than Arrow Managed. However, General Money Market is 4.24 times less risky than Arrow Managed. It trades about 0.05 of its potential returns per unit of risk. Arrow Managed Futures is currently generating about 0.0 per unit of risk. If you would invest 98.00 in General Money Market on September 13, 2024 and sell it today you would earn a total of 2.00 from holding General Money Market or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
General Money Market vs. Arrow Managed Futures
Performance |
| Timeline |
| General Money Market |
| Arrow Managed Futures |
General Money and Arrow Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Money and Arrow Managed
The main advantage of trading using opposite General Money and Arrow Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money position performs unexpectedly, Arrow Managed can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Arrow Managed will offset losses from the drop in Arrow Managed's long position.| General Money vs. Putnam Money Market | General Money vs. Cref Money Market | General Money vs. Ab Government Exchange | General Money vs. Money Market Obligations |
| Arrow Managed vs. Nasdaq 100 2x Strategy | Arrow Managed vs. Siit Emerging Markets | Arrow Managed vs. Origin Emerging Markets | Arrow Managed vs. Franklin Emerging Market |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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